1. Given the assumptions of perfect capital mobility and a fixed exchange rate system, discuss the effects of an increase in the money supply. Provide a graph of the open economy IS-LM model to illustrate.
2. The financial crisis and recession that started in the U.S. in 2008 spread worldwide rapidly. Explain what government and the central bank could do in response to recession, and comment on the fiscal and the monetary policies conducted by the industrial countries.
3. Describe the process of consumer choice as illustrated with a budget line/indifference curves approach can explain the downward sloping demand curves that consumers have for goods, such as Coke?